£1m of delayed customer payments for exploration business

Exploration business Getech was hit with cash flow issues due to £1m of delayed customer payments in the financial year it implemented its restructure at a cost of £500,000 and made M&A payments of £500,000.

The Leeds-based minerals and oil and gas exploration group issued a trading update this morning which said that it had experienced delayed customer payments of £1m. These payments have now been made and the current cash balance now stands at £2.4m.  

This has prompted the firm to move its financial reporting year-end from 31 July to 31 December because the current reporting cycle is out of phase with customer budget cycles.  

The group implemented a significant programme of cost saving measures during financial year 2017,  resulting in underlying costs on a like-for-like basis being 32% below that in the financial year of 2016.

Restructuring costs (£0.5 m), M&A payments (£0.5 m) and debt repayments (£0.1 m) saw an additional £1.1m cash outflow. During the financial year, Getech closed sales with a total value of £8.5m, of which £7.7m is revenue in the 2017 financial year (FY 2016: £7 m). 

Cash balances at 31 July 2017 totalled £1.7m. This compares to an opening cash balance for the year of £2.8 m. The firm said that the reduction in cash was temporary, reflecting the timing impact of several unforeseen and exceptional payment delays, which at the year-end totalled £1m.

The report said: “These late payments have now been received and at 18 September 2017 Group cash balances totalled £2.4m, which is reflective of more normal working capital conditions.”

Adjusting FY 2017 for £1m of delayed customer payments and a combined £1.1 million of redundancy, M&A and debt costs, Getech’s operations delivered an underlying year-on-year net cash inflow of £1 m.

The company said that these results were in “what remains a volatile market”. It said that it had worked to enhance its cash profitability through cost management and has strengthen the commercial positioning of its products and services. 

Jonathan Copus, Getech CEO, said: “Having been distorted by year-end cash timing issues that lay outside of the Group’s control, and after one off restructuring and M&A payments, our current cash balance of £2.4 million highlights how the 2017 programme of cost reductions and operational enhancements have strengthened Getech’s underlying financial position.

“When combined with a healthy inventory of revenue to pre-fund FY 2018 product development the group is well positioned to target a variety of fresh operational opportunities.”

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